Carl DeMaio Reacts to State Supreme Court Ruling on City Employee Pensions

By Mary Aug 2, 2018

The state Supreme Court today ruled that a San Diego citizens' initiative that cut back city employee pensions was illegally placed on the ballot, and ordered an appeal court to consider a remedy.

Proposition B, initially approved by voters in 2012, eliminated guaranteed pensions for new city employees, except police officers, and replaced those benefits with 401(k)-style retirement plans.

In 2015, one of the city's largest public sector unions challenged the benefit system, alleging former Mayor Jerry Sanders and other officials illegally placed the measure on the ballot without conferring with labor groups. The Public Employees Relations Board ruled with the union, but the Fourth District Court of Appeal reversed the decision in April 2017.

Now, the appeal court's decision is overturned.``We reverse the Court of Appeal's judgment and remand for further proceedings to resolve issues beyond the scope of this opinion,'' wrote Associate Justice Carol A. Corrigan in Thursday's decision, in agreement with the other five justices.

Former San Diego City Councilmember Carl DeMaio, who authored and led the coalition to pass the measure in 2012, offers the following statement:

“We are pleased that the Supreme Court refrained from ordering the reversal of Prop B – a citizens initiative that was overwhelmingly approved by San Diego voters in 2012. However, taxpayers must be very concerned by what may happen next.

Specifically we are concerned that the Supreme Court ruling opens the door for the lower court to consider a yet-undefined “remedy” for the so-called the so-called violation of the City of San Diego’s duty to meet and confer on pension changes before implementing them. That remedy could range from a simple monetary fine for not meeting and conferring or it could be as wide-ranging as overturning part or all of Prop B.

We will vigorously fight any attempt to modify or overturn any part of Prop B. As a result of today’s ruling, we are prepared to take the following steps:

First, we intend to defend the implementation of the Prop B Pension Reform Initiative in the “remedy” phase of this dispute when the Appeals Court takes up this matter. If the Appeals Court in any way changes or reverses the voter-approved pension reforms in Prop B, we intend to appeal that violation of the People’s vote back to the Supreme Court. That appeal will force the Supreme Court to decide whether the Constitutionally-protected Citizens Initiative right can be invalidated by unelected bureaucrats using a little-known state law. We highly doubt this will occur.

Second, we will proceed with our previously-announced plans to file, qualify and pass a statewide Pension Reform Initiative that will be a Constitutional Amendment that the no court will not be able to ignore. The statewide initiative will apply to San Diego in addition to all other parts of the state and is modeled after Prop B. We are also exploring language in our statewide initiative to reverse any remedy imposed by the Appeals Court.

Third, while we pursue our legal defense of Prop B, we intend to file, qualify and pass another San Diego Pension Reform Initiative for the 2020 election that will shift the cost of any reversal of Prop B to city employees so taxpayers do not bear any costs. This measure should serve as a warning to government union bosses that their attempts to seek any remedy to invalidate Prop B will be met with retaliation by irate voters who will not accept their votes from 2012 being invalidated.”

Listen to Carl DeMaio's coverage of today's ruling below.

The court ruled that although it was a citizens' initiative, Sanders' support of Prob B as policy warranted engagement with the unions under the Meyers-Milias-Brown Act, which gave city and county employees the right to collective bargaining in 1968. Governing bodies ``or other representatives as may be properly designated'' need to engage with unions ``prior to arriving at a determination of policy or course of action,'' according to the act.

Sanders had said he supported the measure as a private citizen, not a public employee. The Supreme Court ruled that Sanders did use the power of his office to push the initiative, however.``He consistently invoked his position as mayor and used city resources and employees to draft, promote and support the Initiative. The city's assertion that his support was merely that of a private citizen does not withstand objective scrutiny,'' Corrigan wrote.

In overturning the Public Employees Relations Board ruling in 2017, the appeal court took an ``unduly constricted view of the duty to meet and confer,'' according to the Supreme Court ruling.

The Supreme Court ruled that the appeal court address an ``appropriate judicial remedy'' for the illegal placement of the initiative on the ballot.

The Public Employees Relations Board had previously ruled the city must pay employees ``for all lost compensation'' related to lost pension benefits, which would cost millions of dollars.

The 401(k)-style system was originally intended to save taxpayers money by reducing future pension liabilities. Approved by 65 percent of voters, the system was the first of its kind among California municipalities.